EC World REIT Q1 DPU falls 19.8% amidst lower revenue and higher interest rates

The manager reported lower operating performance during the period.

EC World REIT said its distribution per unit declined 19.8% to 0.904 Singapore cents in the first quarter of the year (Q1 2024).

In a bourse disclosure, the manager also said its distribution to unitholders fell 19.8% to $7.32m mainly due to lower revenue and higher finance cost.

The REIT’s gross revenue in Q1 was down 10.1% to $25.3m, while net property income fell 10.6% to $23.31m.

This was attributed to the discontinuation of China Tobacco leases in relation to Hengde Logistics Phase I, lower rental income from Chongxian Port Logistics, weakening of the yuan against Singapore dollar by 4.3% year-on-year, offset by higher late fee, organic rental escalations, and lower operating expenses at the properties.

According to Goh Toh Sim, executive director and CEO of the manager, revenue in yuan was also down 6% in Q1 2024.

“Due to the delay in collection of related party rent receivables and the non-completion of the proposed divestment, ECW Group has insufficient funds to maintain its operations for the time being,” he explained.

Meanwhile, finance costs increased 5.9% to $11.8m from a year ago due to higher interest rates in the quarter.

ALSO READ: EC World REIT takes legal action against sponsor amidst mortgage dispute

EC World said it was not able to make distribution to unitholders for the first half of 2023 which was to be paid on 28 September 2023 due to insufficient funds.

“The payment of the 1H2023 distribution will be deferred to a future date when the ECW REIT has sufficient free cash for the distribution,” it noted.

The manager said there was no distribution for the second half last year. Subject to funding availability, the next distribution would be for the period from 1 January 2024 to 30 June 2024, it noted.